CORRECTED-LVMH's Hermes stake targeted by preliminary probe

Friday, 12 Oct 2012 | 1:41 PM ET

SHARES

(Corrects size of LVMH stake in Hermes to 22.6 percent from 22.3 percent)

PARIS, Oct 12 (Reuters) - Paris prosecutors have launched a preliminary criminal investigation into the conditions surrounding luxury group LVMH's building of a stake in bag maker Hermes , the Paris prosecutor's office said on Friday.

The move comes after Hermes last month asked prosecutors to open a probe into alleged insider trading and share manipulation by LVMH.

The police are making "checks", according to an official at the prosecutor's office. The prosecutor could subsequently either hand the case to an independent investigating magistrate or drop it altogether.

LVMH, which has built up a stake of 22.6 percent in Hermes, declined to comment. The group led by billionaire businessman Bernard Arnault said last month it planned in turn to file a complaint for "blackmail, slander and illegal competition" and repeated that its initial stakebuilding was "perfectly regular".

(Reporting by Thierry Leveque; Additional reporting by Christian Plumb; Editing by James Regan)